Granite Construction Inc. Stock Upgraded (GVA)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Granite Construction (NYSE: GVA) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:
  • GVA's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 1.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.34, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.16 is sturdy.
  • In its most recent trading session, GVA has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • GRANITE CONSTRUCTION INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, GRANITE CONSTRUCTION INC reported lower earnings of $1.14 versus $1.30 in the prior year. For the next year, the market is expecting a contraction of 121.1% in earnings (-$0.24 versus $1.14).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Construction & Engineering industry. The net income has significantly decreased by 70.4% when compared to the same quarter one year ago, falling from $37.12 million to $11.00 million.

Granite Construction Incorporated operates as a heavy civil contractor and a construction materials producer for public and private sector clients in the United States. The company operates in four segments: Construction, Large Project Construction, Construction Materials, and Real Estate. The company has a P/E ratio of 149.1, above the S&P 500 P/E ratio of 17.7. Granite Construction has a market cap of $1.39 billion and is part of the industrial goods sector and materials & construction industry. Shares are up 2.6% year to date as of the close of trading on Thursday.

You can view the full Granite Construction Ratings Report or get investment ideas from our investment research center.

3x UPSIDE POTENTIAL: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

If you liked this article you might like

14 Stocks That Could Skyrocket From Trump's Border Wall With Mexico

These Stocks Could Soar if and When Trump's Infrastructure Package Becomes a Reality

Granite Construction Stock Rising on California Spending Bill, Goldman Sachs Rating